U.S. Gains in a Spat With China Over Tariffs

WASHINGTON — The World Trade Organization sided with the United States on Friday in a dispute over punitive Chinese tariffs on American exports of cars and sport utility vehicles.

China, which joined the W.T.O. in 2001 in a move that signaled its broader entry into the global market system, had already lifted the tariffs involved in the dispute, but American officials declared victory, citing the decision as the latest in a series of rulings that it has won against Beijing.

“China has had 14 years — 14 years — to start playing by the rules,” said Senator Debbie Stabenow, Democrat of Michigan, at a news conference in Washington. “But instead we see illegal and improper activities over and over again. As long as China keeps up this illegal behavior, we can and must respond with these kinds of strong enforcement actions.”

The decision comes against a backdrop of increasing commercial tensions between Beijing and Washington. The Obama administration has criticized China for its supposed state-sponsored spying on American firms, and challenged its willingness to play by the rules over trade in cars, steel and chickens and other goods. The broader diplomatic situation has become tense as well, over concerns about how to deal with North Korea and whether China’s territorial ambitions in the South China Sea and elsewhere threaten United States allies in the region.

On Monday, the United States filed criminal charges against Chinese military officers, accusing them of breaking into the computer networks of American companies and a union group. That prompted Senator Charles E. Schumer, a New York Democrat, to ask the administration to file a new suit against China at the W.T.O.

“Cyberattacks from China and other nations could prove crippling to American businesses in the years to come, so we need real teeth in our response,” Mr. Schumer said.

In response to the Justice Department action, China pulled out of a working group on cybersecurity and said that Washington’s action “grossly violates the basic norms governing international relations.”

Even though the new W.T.O. ruling will have no immediate practical effect, it is seen as potentially important for American businesses, as it might discourage China from putting up antidumping or anti-subsidy tariffs in response to foreign trade actions that it dislikes in the future.

“This is an important case, and it’s an important victory and it is important for the auto industry,” said Representative Sander Levin, also a Michigan Democrat. “It’s important for manufacturing. But it’s important even beyond that.” Mr. Levin said that it showed that the administration would be tough with China, demanding an equal playing field for American workers and firms.

China imposed antidumping tariffs of 2 to 8.9 percent on American cars and S.U.V.s with an engine displacement of more than 2.5 liters in December 2011, saying that these vehicles were being sold to dealers in China for less than the full cost of manufacturing them. China also imposed additional anti-subsidy tariffs of 12.9 percent on large-engine passenger vehicles from General Motors and 6.2 percent on these vehicles, mainly Jeeps, from Chrysler.

Beijing contended that the government-managed bankruptcies of G.M. and Chrysler had the effect of providing subsidies for these manufacturers’ exports.

A W.T.O. panel in Geneva spent more than a year reviewing legal briefs from the two sides over the Chinese commerce ministry’s action.

China’s “unjustified duties” affected about $5 billion in automobile exports, said Michael B. Froman, the United States trade representative. “This is also an important victory that impacts our nation’s workers and their families.”

American trade officials said that they did not know the actual dollar value of any lost sales because of China’s tariffs.

The W.T.O. panel found that in imposing penalties on imported large-engine vehicles, China had failed to prove first that the imports were causing any injury to its domestic industry. International free-trade rules require a so-called injury determination to prevent countries from imposing tariffs to forestall imports from entering at all, instead of waiting to see if they actually cause a problem.

The panel also found fault with the Chinese government’s methodology in calculating that automakers with factories in the United States — including Daimler, which makes Mercedes-Benz, and BMW of Germany — had underpriced their sales in China. Large cars and S.U.V.s in China often cost as much as three times as the same models cost in the United States, although this is mostly because of heavy taxes that China has imposed in large-engine market segments where its domestic manufacturers have virtually no sales.

Officials at the commerce ministry in Beijing and at the Chinese mission to the W.T.O. in Geneva did not respond to requests for comment.

The W.T.O. ruling is the third in favor of the United States in recent years. Beijing and Washington have also disagreed on trade terms for broiler chickens, rare earth minerals, tires, steel and auto parts. A separate W.T.O. panel is considering an American complaint that China has subsidized exports of car parts to the United States.

Automakers have been rushing to shift production of practically every model to China, as it has emerged as the world’s largest market in terms of the number of vehicles sold, although the American market remains somewhat larger in dollar terms.

From the start, China’s commerce ministry imposed the tariffs for a term of only two years, and they expired in December. An American analysis of the tariffs found that China has not been collecting them since then.

The United States nonetheless pressed for the W.T.O. to declare that China had misapplied antidumping and anti-subsidy rules in imposing the tariffs at all. The goal was to set a legal precedent limiting China’s ability to slap antidumping and anti-subsidy tariffs on other products without following internationally approved procedures.

The losing party in W.T.O. cases almost always appeals the decision, and sometimes both sides do so, with the winner seeking a clearer endorsement of its position. China has a consistent track record of appealing when it loses on the panel report.

Correction:May 28, 2014

A picture caption with an article on Saturday about a World Trade Organization ruling that favored the United States in a tariff dispute with China over American vehicles reversed, in some copies, the identifications of the two men shown. Representative Sander Levin was on the right, and Michael B. Froman, the United States trade representative, was on the left.